The Most Critical Startup Talent Crunch: Great Leaders at Growing Companies

A lot of people have talked about the need for NYC to have a PayPal–a multi-billion dollar exit that scattered on the rest of the community a bunch of experienced startup talent that scaled a company over time, as well as a host of new angel investors.

The key to this, of course, is that PayPal had over 200 employees when it was acquired. As Shai points out, if you sell for a billion dollars and have 13 employees like Instagram, you’re really not going to do much for the ecosystem.

To foster the ecosystem in New York City, it seems that the community, investors, and the government have taken an approach that focuses on letting a thousand startups bloom. We now have incubators, accelorators, business plan competitions, and government backed seed programs, but it’s not clear to me that this is where the pain is or where the impact is. Just because you help more people start doesn’t mean you automatically get more success stories. I could double the number of people who get into the NYC marathon (which I’m running and raising money for, btw…), but that doesn’t mean I’d double the number of people who run it in under three hours.

One could argue that the most successful entrepreneurs would always be successful, no matter how big the obstacles–and supporting them after they prove themselves is critical. How do you get more people like Paul and Rony from Indeed.com undoubtedly spurning acquisition offers for seven years while they build a 550 person company with tens of millions of dollars in profit that sells for a billion dollars?

The answer is top level management talent.

When your employee base is over a hundred people–the situation that companies like ZocDoc and Appnexus are in–your ability to succeed as a company is directly tied to finding people who enable you to scale. I had lunch with Cyrus, the founder of ZocDoc, the other day. He told me that what he was essentially looking for was people who would otherwise be founders–the kind of person who could figure out what was needed instead of just following directions, who could hire, who could train young talent, and who could create.

These people, in an environment where over 50 companies will participate in accelerator programs in NYC every year, are out starting companies instead of joining big companies as employee 50, 75, or 200. That’s a real problem because most of these startups will fail, yet a company with a real business that sits at 50 employees has a serious chance of hiring 450 more people–people who could grow with a company over time and create way more companies than the accelorator might. How many companies can be traced back to DoubleClick, for example–even above and beyond Kevin Ryan and Dwight Merriman who went on to build several hugely successful companies like Gilt and 10Gen.

One of the many frustrations of being a Met fan as I have said time and time again is that the Yankees get other team’s closers to pitch the seventh inning. They get starting outfielders to platoon. Recent All-Stars join to sit the bench–all because they want to be part of a successful team more than they want to be the star. That’s more of the kind of talent NYC’s ecosystem needs. How do we get the kick ass iPhone dev to lead mobile for ZocDoc or lead product at Appnexus so those companies can go to 1000 employees, versus messing around with a really suspect idea that probably doesn’t have legs? Don’t get me wrong–I love when great people start great ideas–but we have way more people starting things because starting something is cool than we have actually great ideas. Starting things has gotten way too cool, and being part of a successful team is too far out of favor for this ecosystem to continue.

A particular issue is the people who transition from other industries who should probably think about joining a growth stage startup as a start, versus going straight to building MVPs in a co-working space. It may seem like an anti entrepreneurial argument, but it’s not. I firmly believe that the more 500 person billion dollar exits we see–ones helped by great senior managers–the more small startups we’ll see spin out of that, driven by experienced people with great startup backgrounds.
Charlie O’Donnell is founder of Brooklyn Bridge Ventures. Opinions expressed here are entirely his own.